An alternative to checking

[Scanner]

I did this 10 years ago on Suze Orman's advice.

I opened a Resource Management Account at a brokerage vs. opening a checking account at a bank.

Basically, you get a full checking account, 52 ATM transactions/year, and a credit card (which functions as an ATM). At the end of the month, you automatically get your credit card bill paid off from the money market type of fund it sits in.

It's not FDIC insured but I have never had a loss in 10 years.

I thought it was earning more so I checked this morning - yielding about 1.10%.

Not much, but you figure $10,000 on average sits in there per year, that's a $100.00.

I checked Bank of America, who I have my business checking through and it appears their yield is .05%.

The only downside - no teller - we send our checks in to be deposited. A little problematic getting direct deposit set up. After 10 years, we still send out checks in. The online banking can be a little confusing.

I'll admit though I haven't shopped in awhile for a better alternative for your checking.

Anybody got any?

[anonymous_saver]

I don't really have an alternate to checking. However, my check card from my credit union is pretty cool, I get cash back on it, it comes to about $5 or so every quarter, but it is directly added to my account and is not considered interest on my tax forms. $20 a year isn't much, but heck I would be using the check card anyways for the same exact purchases. To be honest, I forget about the quarterly deposits and I get a nice little suprise every 3 months when I am balancing my checkbook.

My checking account earns 0.10%. This doesn't really both me because I don't keep much in it. It would earn 0.5% if I kept over $2,500 in the account, but I do not do that as I only keep enough money in my checking account to pay for the bills that month. I keep the rest in a higher interest savings account.

[crabbypatty]

ING's checking is now earning 4% apy, almost as much as their savings. Why not switch?

[Scanner]

Crabby,

That's why I put the thread out - it's been 10 years and it may be time to take my business elsewhere.

At one time, I know I was earning near 3% on my checking but it appears to have crept down.

[poundwise]

There are a few alternatives for interest checking online. The ING checking has a good rate but also has some limitations that other banks don't have such as not having paper checks. If that soft of thing doesn't make much difference to you, then ING may be a great choice for interest checking.

UnivestDirect has a so-so looking web site but the same 4% APY on a more full-featured account.

Everbank is offering an intro rate of 6.01% APY on its online interest checking account. (Though it does default back to a lower rate after the intro period.)

[Scanner]

Well, I just got off the phone with the my rep. at UBS/Painewebber. He did admit that the 1.09% yield was low.

We talked for sometime about their services. I have always kind of wanted a professional to have in my corner (not that I don't value your advice here all. . .) but what it comes down to is 1.5% of my assets, maybe less as I accrue wealth.

My accountant is a CFP and we always talk about getting together and having him advise me that's more fee-based and independent. What he charges for his time/expertise, I don't know.

One thing that turned me off was he was saying that loaded mutual funds perform better. . .well, he didn't quite put it like that. He said something like, "Well, I don't care if a fund charges 4.5% load if it's earning 15% year and has a 5 star Morningstar rating." A subtle implication that expensive funds perform better.

He also said the load goes to paying the mutual fund manager - I thought the load was the sales commission for the broker? Isn't the management fee basically the cost of managing it? (the managers computer, his salary, his plush office, his hookers).

Well, that's ducky, I'd agree to a high load but it's impossible to predict at any one time what fund is going to return what - it may be a loaded fund or it may not.

I have never been anti-advice but $1500.00/year to help me tweak my portfolio (assuming I reach 100K here soon) seems awfully high for advice. He was nice and all. . .I just think it may be time to part ways.

[sweeps]

Originally Posted by Scanner

I did this ... on Suze Orman's advice.

That was your first mistake.

[Aleta]

Scanner: When they say that loaded funds perform much better; that all depends on the manager. Also, they have to beat the index's and that's not doable every year. Loaded funds, more money for them.

[boefixepa]

Sorry, I didn't read all the responses, I just wanted to jump in. THERE ARE BETTER THINGS OUT THERE!!!

I have what is called a high yeild internet checking account at Zions Bank. It earns over 1-2% interest on a 2.5K min. (It's at 1.01% right now...grrr.)The interest rate goes up for larger minimums if you keep them to as high as 3.5% I believe. It's still a checking account, so I can write checks and have a Visa ATM card...not that I use it...and since it is also a brick and morter bank aroung here I can do teller deposits. Technically the could charge for that, but I've never been charged. If I was I'd do the deposit at the ATM. It takes a day longer to show, but at least I don't have to mail it in.

Here is the link to the details on the account
Money Market Accounts High Yield Checking Saving Accounts Online


I'd check around and see what banks in your area have to offer. It's only half th interest I'd make at say ING or ED, but at least I am makeing $15-$20 a month on the money in my account. It had been a great account for me with no additional fees of any kind.

[anonymous_saver]

Originally Posted by boefixepa

Sorry, I didn't read all the responses, I just wanted to jump in. THERE ARE BETTER THINGS OUT THERE!!!

I have what is called a high yeild internet checking account at Zions Bank. It earns over 1-2% interest on a 2.5K min. (It's at 1.01% right now...grrr.)The interest rate goes up for larger minimums if you keep them to as high as 3.5% I believe. It's still a checking account, so I can write checks and have a Visa ATM card...not that I use it...and since it is also a brick and morter bank aroung here I can do teller deposits. Technically the could charge for that, but I've never been charged. If I was I'd do the deposit at the ATM. It takes a day longer to show, but at least I don't have to mail it in.

Here is the link to the details on the account
Money Market Accounts High Yield Checking Saving Accounts Online


I'd check around and see what banks in your area have to offer. It's only half th interest I'd make at say ING or ED, but at least I am makeing $15-$20 a month on the money in my account. It had been a great account for me with no additional fees of any kind.

The Zions bank is not really much better than a lot of options for me since I hardly keep anything in my checking account. Plus, with what sounds like a high minimum like $2,500 to me, I could have been earning 5%+ on most of that money anyways through my online savings account. Much more than 1-2%. I guess we can all have preferences though.

[boefixepa]

Well, I only keeping my monthly roating month for bills and such in there, but it's enough to maintain the min. The rest is in better earning accounts. But I'd hate the thought of having to mail in a deposit. You mentioned you had an average of 10K, so I was hoping you'd hit the next bracket, but I looked and you wouldn't. The account you have though really isn't serving you any better than a regualr free checking account, so this looked better to me. Hope you find what you are after.

[Scanner]

My checking account fluctuates anywhere from $4000 to $10,000/month.

This is because we don't escrow our property taxes and then we pay our car insurance 1x/year. That's "Triple Whammy November." - $2000 quarterly tax bill on Oct. 30, a $2200 car insurance payment by Nov. 15th, and Christmas in addition to ordinary expenses.

Anyway, I was quite impressed with Evergreen.

Ironically, I was looking for a way to invest in silver and couldn't find a place with reasonable fees, aside to this topic. Evergreen looks very interesting, maybe an alternative to my silver ETF.

[Ima saver]

My business checking account pays between .005 and .0075 depending on the amount of the balance. I do keep a large amount in there because I have to use it for pay bills on the houses we build. I usually earn between $5-10 a month interest, which is better than nothing. I have a money market checking which pays 5.25% but I can only write 3 check a month and I write 30-40!!

[Aleta]

Ima: It seems to me that I have seen some pretty high rates at Washington Mutual for business accounts. Do you have one up there? To keep such a large amount of money not earning any real interest is losing you money. Check them out. When I had them, they used to give me my checks back monthly, but you have to request it when you first open the account.

[jmjj215]

You can find plenty of no-load funds that match what a load-fund is doing. To say that a load fund performs better isn't accurate. That's too much of a generalization.

[safari]

EverBank is currently offerring 6.01% APY for the first 3 months on newly opened FreeNet checking accounts. After the promotional period you'll be earning 3.41% APY on balances under $10,000, and if you have a higher balance the APY will be even greater. More info here. I think it's better than ING Electric Checking because you can write paper checks, too.

[kv968]

Originally Posted by Scanner

Well, I just got off the phone with the my rep. at UBS/Painewebber. He did admit that the 1.09% yield was low.

We talked for sometime about their services. I have always kind of wanted a professional to have in my corner (not that I don't value your advice here all. . .) but what it comes down to is 1.5% of my assets, maybe less as I accrue wealth.

My accountant is a CFP and we always talk about getting together and having him advise me that's more fee-based and independent. What he charges for his time/expertise, I don't know.

One thing that turned me off was he was saying that loaded mutual funds perform better. . .well, he didn't quite put it like that. He said something like, "Well, I don't care if a fund charges 4.5% load if it's earning 15% year and has a 5 star Morningstar rating." A subtle implication that expensive funds perform better.

Morningstar doesn't take into consideration load fees when figuring out the ratings. Their ratings are using returns after the load's effect has diminished.

He also said the load goes to paying the mutual fund manager - I thought the load was the sales commission for the broker? Isn't the management fee basically the cost of managing it? (the managers computer, his salary, his plush office, his hookers).

You're right, the load goes to the broker.

I have never been anti-advice but $1500.00/year to help me tweak my portfolio (assuming I reach 100K here soon) seems awfully high for advice. He was nice and all. . .I just think it may be time to part ways.

Although it's nice to have a professional's opinon and advice in your corner, you may be better off doing it all yourself.

[disneysteve]

Another alternative to checking is a money market mutual fund. For example, Vanguard Prime Money Market (VMMXX) is currently paying 5.09%. It has a $3,000 minimum. You can write checks for $250 or more. So this probably can't totally replace a traditional checking account, but it is a good option if you keep a larger balance on hand.

[Aleta]

I agree with Steve that Vanguard rate is good and it can be like a savings. I use it for the irregular bills that are mostly over the $250. required to write a check, plus I can transfer money out of there to fund our other funds. It's really convenient.

[Scanner]

DisneySteve,

Yeah, actually, the PaineWebber fund is a money market fund anyway, which is why I was surprised it wasn't getting a better return.

I wonder if we could do this (just a brainstorm) - get a Vanguard acct. and send checks for $250 to every utility we pay and just work off a credit (gas, electric, cable, water, sewer, telephone). So, if my gas in the summer is let's say $125.00 - we'd have 2 months credit.

I wonder if it would pay with the interest you would lose by not having the money in there until it was owed.

Just a thought - probably too complicated. Would still need a checking account for rinky-dink expenses like doctor copays, little league sign-ups, etc. Either that or do money orders, which I can't imagine is cost-effective.